The Marikana massacre: What does it mean for Botswana?

| Friday November 2, 2012 00:00

To anyone who has lived through the era of apartheid, the horrible events around the platinum mines of South Africa's North West Province brought a dreadful deja vu that as the events unfolded on television, many millions of people of my generation felt that they should have been playing it in black and white, as though this were an impossible nightmare being relived from the worst days of Sharpeville and the Soweto Uprising.

These events are far more disastrous than just the tragic loss of life as they will have long-term effects for all South Africans and all of its neighbours. Following these events, commentators glibly looked at South Africa and said 'nothing has changed'. Shortly after the massacre, international ratings agencies stepped in and downgraded South Africa, and just last week, the Economist magazine was in effect writing an economic obituary for South Africa on its front cover.

To equate the ANC government to that which went before is simply wrong. In the 18 years since the end of apartheid, much has been done to unwind the dreadful injustice perpetrated on all non-white South Africans.Millions of homes have been built for the poor by the ANC government and there have been new education and welfare programmes developed. But all of this was not going to be enough to unwind generations of inequality and this was always going to be a long and inter-generational journey to create a more equal and just society in South Africa. The question that all who knew the problems facing our neighbour was whether the population was going to be patient enough to wait for a slow redistribution of wealth. Marikana answered that question definitively for the international community. The problem is that despite the government's efforts, South Africa's distribution of income has actually worsened since the end of apartheid and most South Africans, educated or not, knew that what was happening was a distribution in favour of the old white elite as well as the new black elite that was profiting greatly from the system of black empowerment.

What Marikana signified, as opposed to what it was and was not to the business community, was the clearest possible statement that for those at the bottom - the young, the poor and the unemployed had finally lost their patience with the political process that had delivered some results but was widely seen as increasingly inadequate, corrupt and not providing sufficient services that are needed by the population.For Botswana, like all of South Africa's neighbours, Marikana will be at very best a severe economic shock, and possibly an economic disaster, because it has undermined faith in the political stability of our neighbour. South Africa is our main trading partner and an important source of government revenue through the SACU revenue sharing formula. Investment ultimately is like religion, an act of faith: you have to believe in tomorrow to be an investor because you invest today expecting returns in an unknowable future. Undermine the faith in a tomorrow that is stable and peaceful and the investment stops. This is what is now widely expected to happen in South Africa over the coming months and may well result in a recession in the coming year. This in turn will diminish in a year or so. When that happens, the revenues that the Government of Botswana will receive from Pretoria as South African imports contract and import duties which make up a large part of the revenue pool will also decrease. But it should also be recalled the South Africa is an important market for many of our small manufacturers who export there, and a downturn there will mean decreased exports from Botswana. But Marikana will have far more serious consequences for Botswana in the longer term. In the past, anything that made South Africa to appear to be a more risky place to invest was seen as good for investment in Botswana. The utterances about mine nationalisation in South Africa by the former head of the ANC Youth League, Julius Malema, did much to encourage mining investors to look for safer locations than what was seen as an increasingly turbulent South Africa. Marikana, however, is of an entirely different order of magnitude in terms of its effect upon our giant neighbour and faith that the business community has in its future stability.

The real risk to Botswana of Marikana is the as yet unknowable longer term effects on the South African economy.If the magnitude of the downturn that follows Marikana is very serious, it will mean that Botswana may be in for several years of diminished government revenues. But more threatening is the possibility that South Africa will go into a severe recession that necessitating intervention from the IMF. The macroeconomic aggregates and the levels of debt in South Africa are not very adverse at the moment, but with a grim outlook this could change relatively quickly. Growth rates in all of the SACU countries have been particularly poor of late and well below the sub-Saharan African average.  An IMF loan programme to South Africa could have the most profound effects on Botswana. The first thing that the fund looks for in countries seeking loans is areas to cut from its expenditure, and one of the areas that the IMF dislikes the most is the current SACU revenue sharing formula.

This is because the formula makes the smaller countries highly dependent upon import duties, retarding liberalisation that the fund supports religiously. Not only does the IMF hate the formula which sees about ZAR15-20 billion in customs revenue transferred to Botswana, Lesotho, Namibia and Swaziland (BLNS) each year over and above what would be the case if there were no SACU, it is also hated by the South African treasury which would happily see it gone.But the South African political leadership know that the cost of SACU at ZAR 15-20 billion is small change in an overall South African budget of ZAR1.3 trillion. If they pull the plug on SACU revenues, it would destabilise all of South Africa's neighbours, including Botswana but much more seriously Swaziland, Lesotho and Namibia. In particular Swaziland and Lesotho, which rely on between 60-75 percent of their government budgets on SACU revenue, would almost certainly become failed states if the revenue were pulled out from under them suddenly. But if a severe recession hits South Africa following Marikana, then the government in Pretoria may have no choice but to slowly pull the plug on SACU.What is now certain is that long after the work of the Commission of Enquiry reports to the government, the families of the miners and policemen who died and the people of Southern Africa generally will continue to pay for the Marikana tragedy.

*These are the views of Professor Roman Grynberg and not necessarily those of the Botswana Institute for Development Policy Analysis where he is employed.